Can you start an LLC just to write things off your taxes? Having a debate with my buddy

Your instincts are correct. Simply forming an LLC doesn't give you a magic tax-deduction wand. The key concept here is "ordinary and necessary business expenses" - the IRS standard for what's deductible. Your friend's cousin is playing a dangerous game. The IRS specifically looks for these patterns because they're so common. While businesses can absolutely deduct legitimate expenses, they must be actually related to the business. That new truck? Only deductible if it's primarily used for business purposes. Vacations? Only if they're genuine business trips. Electronics? Only if they're necessary for business operations. Also important: you need to be engaged in business with the primary purpose of making a profit, not just tax avoidance. If your friend's cousin shows losses year after year while claiming tons of deductions, that's a major red flag for what the IRS calls "hobby loss rules.

After struggling with business deductions for years, I found this amazing AI tool called taxr.ai that helped me figure out exactly what I could legitimately deduct for my LLC. I was doing photography on the side and wasn't sure what equipment, travel, and office expenses qualified. It analyzed all my receipts and business documentation and gave me specific guidance based on actual tax law. The best part was it showed me some deductions I was missing (like mileage to client sites) while warning me about things that would raise red flags (like trying to deduct my entire camera when I use it 50% for personal use). It's worth checking out at https://taxr.ai if you're serious about starting a legitimate business and want to maximize deductions properly.

Just wanted to follow up! I tried taxr.ai after posting here and wow - it really cleared up my confusion about business deductions. I was completely wrong about how home office deductions work. Turns out my dedicated workspace that I use for my online tutoring business is totally legitimate, but I needed to measure it correctly and document regular use. The tool showed me exactly what photos to take and records to keep. It also warned me that some of my "business trips" wouldn't qualify because I wasn't spending enough time on actual business activities during the travel. Saved me from a potential audit headache while still helping me claim the deductions I'm actually entitled to.

Anyone who's dealt with the IRS knows they're not as clueless as people think. When I had questions about what I could legitimately deduct for my small business, I tried calling the IRS directly. Spent HOURS on hold just to get disconnected. Multiple times. Finally found this service called Claimyr that got me connected to an actual IRS agent in under 15 minutes. You can see how it works at https://youtu.be/_kiP6q8DX5c - basically they handle the hold times for you and call when an agent is ready. I used it at https://claimyr.com and finally got clarity straight from the source about what business expenses I could legally deduct and what would constitute fraud. The agent I spoke with was surprisingly helpful and walked me through exactly what documentation I'd need to keep to support my deductions if I ever got audited.

Ok I need to eat crow here. After posting my skeptical comment, I decided to try Claimyr since I've been getting nowhere with the IRS about a business tax issue. I was 100% convinced it wouldn't work, but I was desperate. Not only did I actually get through to the IRS, but I connected with an agent who explained exactly why my home-based consulting business couldn't deduct certain expenses I was planning to claim. She walked me through the "ordinary and necessary" test for business expenses and explained why some of my planned deductions would likely get flagged. Saved me from making some expensive mistakes on my return. Having someone actually answer my specific questions rather than trying to interpret confusing publications was worth every penny. Sometimes being wrong feels pretty good!

Former IRS auditor here. Creating an LLC specifically to write off personal expenses is literally the textbook definition of tax fraud. The entity type (LLC, S-Corp, etc.) doesn't matter - what matters is business purpose and profit motive. The "ordinary and necessary" test is what we applied to every single expense. A $70,000 truck for a small landscaping business? Probably excessive. First-class flights to Hawaii with 1 business meeting and 6 days of beach time? Not primarily for business. Gaming computer for an accounting business? Unlikely to be necessary. People think they're clever doing this, but these schemes are the first things we looked for. And the penalties aren't just financial - tax fraud can be criminal.

Just to add another perspective, I formed an LLC for my freelance design business last year, and here's what I learned: it's absolutely NOT a free-for-all for deductions. I tried deducting my new laptop at 100% and got destroyed in an audit because I couldn't prove it was exclusively for business. Now I keep a separate credit card for business purchases, log work vs personal use for mixed items, and maintain a mileage log for my car. My tax guy says the key isn't the LLC - it's having a legitimate business with actual income and keeping meticulous records for anything you deduct.

Your friend's cousin is basically committing tax fraud, and it's only a matter of time before the IRS catches up. I see this all the time - people think forming an LLC gives them some magical shield to deduct personal expenses, but it doesn't work that way. The IRS has specific tests for business deductions: they must be ordinary, necessary, and directly related to your business activities. That truck? Only deductible if it's primarily used for the landscaping business. Personal vacations disguised as "business trips"? That's fraud. Electronics for personal use claimed as business equipment? Also fraud. What really gets people caught is the pattern - claiming tons of deductions with little to no business income, year after year. The IRS calls these "hobby businesses" and they have specific rules to prevent exactly what your friend's cousin is doing. When (not if) he gets audited, he'll face back taxes, penalties, interest, and potentially criminal charges. If you want to start a legitimate business, absolutely do it - but do it right. Keep separate accounts, maintain detailed records, and only deduct expenses that genuinely benefit your business operations.